About Pick of the Day

Every day, I will try to find what I believe is the best looking short term currency trade setup for the upcoming trading day or week. If you're a forex newbie, it can be tricky trying to figure out how to look at charts and draw lines. My goal is help you understand the psychology behind price movements in the foreign exchange markets, so you can learn to analyze your own currency charts and trade on your very own. I will post my ideas and/or reviews through out each session right here, on Twitter and on Facebook.

Pick of the Day: GBP/USD – Trade Closed

Good morning! The US Dollar resumed its run against the British Pound during the Asia and European trading sessions and Cable hit my second profit target. My position was closed at full profit.

1st Half: +200 pips
2nd Half: +350 pipsTotal: +1.375% gain

So, it looks like these choppy markets are back into risk aversion mode as the Greenback rallied across the board. US Dollar strength may continue in the short term as traders pull out of the Japanese Yen and Swiss Franc for safety. This sentiment may continue into next week and I’ll be watching to see if Cable breaks or holds the minor support at 1.4150. Stay tuned and have a great weekend!

Greetings! Since my adjustment, Cable made lows around 1.4170 and nearly hitting my second profit target at 1.4150. I trailed my stop by 100 pips during this move, and my adjusted stop at 1.4400 was nearly hit during the retracement higher. Luckily, it wasn’t and Cable is back on track to test lows once again.

We saw risk aversion today after US data came in weak with both Durable Goods and New Home Sales disappointing. This lead back to a run to the US Dollar as the ‘safe haven.’

We’ve got one more day this week to see if Cable makes any moves lower. I will probably close up my trade before the weekend to avoid any unforeseen event risk. Stay tuned!

Good morning! UK data came out pretty much inline with expectations, but still pretty bad as fourth quarter GDP came in at -1.50%, exports fell to -5.50% and government spending increased in the fourth quarter as well. We saw Cable drop at the open of the European trading session and the fall hasn’t slowed down yet! My first profit target was hit and now it’s time for some adjustments.

Half position closed at 1.4300 to lock in profits. Adjusting stop on remaining position to breakeven (1.4500) to create a risk free trade.

I will continue hold this position and trail my stops from here by 100 pips. If still in the trade by the end of the week, I may close it out before the weekend. Let’s see what happens as we still have plenty of data to get through including housing data from both the US and the UK, and jobs, durable goods, and sentiment data from the US.

Keep on your toes in the midst of the choppiness and stay tuned for updates!

Trade Update: 2009-02-24 20:30

Greetings! My short position was triggered as ‘Cable’ rallied higher yesterday, and after hitting resistance around the 61.8% Fibonacci level we saw sellers jump in and push the pair back below 1.44. Unfortunately, GBP/USD is back above 1.45, so no direction yet for the pair.

There may be a boost in the British Pound, one way or another, with UK GDP coming out in the upcoming European trading session. Expectations for both the quarterly and yearly number are forecasted to be worse than previous numbers. If so, focus may shift back to weakness in the UK, and possibly back to selling the British Pound. In the upcoming US session, existing Home Sales may be the market mover. Expectations are for weak numbers for US housing data. Will it equate to USD weakness, or risk aversion and Cable selling? We’ll have to wait an see.

For now, I will continue to hold my trade. Stay tuned for updates!

Trade Idea: 2009-02-23 14:48

What’s up Forex Fanatics! Got another simple Fibonacci setup on Cable to play with current sentiment that we will see further gains in the Greenback as a “safe haven” play. Let’s take a look!

On the four hour chart, we can see that the pair found resistance at the 61% Fibonacci retracement area and turned lower. Stochastics are in overbought territory and turning lower. Is the risk rally down and will we see a reverse back to the downside?

Sentiment is still for a stronger US Dollar as a “safe haven” and the UK is still playing catch up to the US in terms of actions taken to begin quantitative easing. Should there be a round of ‘risk aversion’ trading this week, we may see the British Pound hit lows around 1.4100 this week.

Lots of event risk this week from both the US and the UK. Most notably from the US is Fed chairman Bernanke’s testimony to Senate Banking committee, housing data, and GDP. From the UK, the events to watch are the GDP, housing numbers, and commentary from Bank of England Governor King.

So, I am short bias for now and I would like to short at 1.4500 if the market get backs up there. I’m using a large stop, area above the previous high, so I’m going to have to reduce my position size. My target is the previous support around 1.4150 and beyond

Short GBP/USD at 1.4500, stop at 1.4700, pt1 at 1.4300, pt2 at 1.4150

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly.

in one hour chart there was a bearish gartley and it was showing 1.46 and 2 hour chart its just touched bollinger band and stochastic levels were overbought and parabolic sar was right there…are they enough to get in what do you say???

by the way i am waiting for short position in eur/jpy 124.70-125.05 and if it stop loss 126.10
pt1:123.12 and if it cannot hold next two days(weekend)
pt2:120
pt3:112
if it break 126.10 then wait for 130 to sell for same prices…

Thanks for the comments everyone and I hope all is trading well! Looks like Cable broke down today on weak UK news and housing data from the US. More risk aversion and flight to the USD. Hey bilal, if your strategy tells you the pair is going long or short, you should roll with it. For me, I used stochastics and fibs and both aren’t indicating I should change my direction yet. julian, there are a ton of views out there going one way or another. That’s why its best to develop your own strategy, execute your plans, and manage your risk. Trying to keep up with all the views out there will just having ya running in circles. Trust me Stick to your own guns, practice and improve, and you’ll be ok!

not yet julian i am watching but 124.70 and 125.05 looks like strong. i will try my chance.but before i said if it cannot break 123.12 before the week over then i get long position @123.12….. now just wait…

in one hour chart there was a bearish gartley and it was showing 1.46 and 2 hour chart its just touched bollinger band and stochastic levels were overbought and parabolic sar was right there…are they enough to get in what do you say???

by the way i am waiting for short position in eur/jpy 124.70-125.05 and if it stop loss 126.10
pt1:123.12 and if it cannot hold next two days(weekend)
pt2:120
pt3:112
if it break 126.10 then wait for 130 to sell for same prices…

Thanks for the comments everyone and I hope all is trading well! Looks like Cable broke down today on weak UK news and housing data from the US. More risk aversion and flight to the USD. Hey bilal, if your strategy tells you the pair is going long or short, you should roll with it. For me, I used stochastics and fibs and both aren’t indicating I should change my direction yet. julian, there are a ton of views out there going one way or another. That’s why its best to develop your own strategy, execute your plans, and manage your risk. Trying to keep up with all the views out there will just having ya running in circles. Trust me Stick to your own guns, practice and improve, and you’ll be ok!

not yet julian i am watching but 124.70 and 125.05 looks like strong. i will try my chance.but before i said if it cannot break 123.12 before the week over then i get long position @123.12….. now just wait…

Thanks again everyone for the comments! Pipwolf – I update the trade above, and Cable didn’t hit my adjusted stop at 1.4400. With one more day until the weekend I will look to close the trade out to avoid any unseen even risk.

Thanks again everyone for the comments! Pipwolf – I update the trade above, and Cable didn’t hit my adjusted stop at 1.4400. With one more day until the weekend I will look to close the trade out to avoid any unseen even risk.